A project has an initial investment of $5,000,000 and a six-year life. The initial investment will be depreciated using the five-year MACRS system. The company's tax rate is 30%. At the end of year six, the equipment will have salvage value and can be sold for $250,000. The annual sales from the project will be $4,500,000 and the cost of goods sold will be 3,500,000. The fixed costs will be $500,000 per year. The annual interest rate is $150,000. The cost of capital is 9%. 

 

Calculate the depreciation table for this project.

Calculate the annual free cash flows from this project.

Answer rating: 100% (QA)

To calculate the depreciation table for this project we will use the Modified Accelerated Cost Recovery System MACRS with a fiveyear recovery period M... View the full answer